Total to pull out of Zambian oil refinery

French multinational oil firm, Total, is in the process of selling its 50 per cent shareholding in Zambia’s sole oil refinery to the government this year.

For over two weeks now, the country has experienced severe shortage of fuel especially petrol because of the on-going maintenance works at the 36-year-old Indeni Oil Refinery in Ndola, about 300 kilometres north of the Zambian capital Lusaka.

The country’s Minister of Energy and Water Development Kenneth Konga informed Parliament last week about the pending conclusion of the transaction.

Total and the Zambian Government are co-shareholders in the refinery on a 50-50 per cent basis since 2001 when the former acquired the shares from Agip.

“In November 2008, Total officially informed the government that it was going to sell its shares. As per the shareholder’s agreement, the government has a pre-emptive right over the sale of Total’s shares,” said Mr Konga.

Best interest

“Therefore, since late 2008, the government and Total have been discussing this issue (transaction). Government had decided that it would be in the best interest of the country for it to acquire Total’s shares in the refinery.”

However, the price of Total’s shares is still unknown. Indeni refines about 24,000 barrels per day.

“Allow me to assure the employees of the refinery that it will continue to operate as it did when Agip sold its shares to Total,” said Mr Konga.

The government’s intention to fully own Indeni has left some Zambians worried.

They fear that the country might face frequent fuel shortages in future going by the government’s inefficiency in managing the firm.

Some insiders in the energy sector attributed the current mechanical faults and continuing fuel problems in Zambia to Total’s pull-out.

The insiders claim that Total was pulling out because the Zambian Government was not meeting its financial obligations towards rehabilitation of the refinery.